Correlation Between POSBO UNSPADRS20YC1 and Truist Financial

Can any of the company-specific risk be diversified away by investing in both POSBO UNSPADRS20YC1 and Truist Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining POSBO UNSPADRS20YC1 and Truist Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between POSBO UNSPADRS20YC1 and Truist Financial, you can compare the effects of market volatilities on POSBO UNSPADRS20YC1 and Truist Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in POSBO UNSPADRS20YC1 with a short position of Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSBO UNSPADRS20YC1 and Truist Financial.

Diversification Opportunities for POSBO UNSPADRS20YC1 and Truist Financial

-0.15

Correlation Coefficient

POSBO UNSPADRS20YC1  Truist Financial

Good diversification

The 3 months correlation between POSBO and Truist is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding POSBO UNSPADRS20YC1 and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and POSBO UNSPADRS20YC1 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on POSBO UNSPADRS20YC1 are associated (or correlated) with Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of POSBO UNSPADRS20YC1 i.e., POSBO UNSPADRS20YC1 and Truist Financial go up and down completely randomly.

Pair Corralation between POSBO UNSPADRS20YC1 and Truist Financial

Assuming the 90 days trading horizon POSBO UNSPADRS20YC1 is expected to generate 1.2 times more return on investment than Truist Financial. However, POSBO UNSPADRS20YC1 is 1.2 times more volatile than Truist Financial. It trades about 0.09 of its potential returns per unit of risk. Truist Financial is currently generating about 0.08 per unit of risk. If you would invest  955.00  in POSBO UNSPADRS20YC1 on September 23, 2024 and sell it today you would earn a total of  125.00  from holding POSBO UNSPADRS20YC1 or generate 13.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

POSBO UNSPADRS20YC1  vs.  Truist Financial

POSBO UNSPADRS20YC1

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, POSBO UNSPADRS20YC1 reported solid returns over the last few months and may actually be approaching a breakup point.

Truist Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Truist Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with POSBO UNSPADRS20YC1 and Truist Financial

The main advantage of trading using opposite POSBO UNSPADRS20YC1 and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSBO UNSPADRS20YC1 position performs unexpectedly, Truist Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Truist Financial will offset losses from the drop in Truist Financial's long position.

The idea behind POSBO UNSPADRS20YC1 and Truist Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.